By Matthew A. Ward

CHESAPEAKE, Va (Reuters) - Exploring one of the country's darkest chapters, the United States National Slavery Museum was supposed to open four years ago on 38 acres along the Rappahannock River in Fredericksburg, Virginia.

Plans for the 100,000-square-foot museum were elaborate: a 450-seat theater, full-scale replica slave ship and hundreds of donated relics such as the leg irons forebears of many Americans wore during the long, cruel voyage from West Africa.

But the museum filed for Chapter 11 bankruptcy protection on September 21, putting its prospects in doubt and leaving donors and supporters of the project conceived 10 years ago by Virginia's first black governor to wonder what went wrong.

Lawrence Wilder, the former governor, and other museum directors aren't offering much public explanation. A spokeswoman for Virginia Commonwealth University's Center for Public Affairs, where Wilder is a professor, said this week he "will not be making any statement at this time."

In February, Wilder blamed the economy for the delay and insisted the museum would be built as planned.

Despite backing from comedian Bill Cosby, a major fundraiser for the museum who reportedly gave $1.2 million of his own money, the museum was unable to pay taxes owed to Fredericksburg on land donated for the project, said city Treasurer Jim Hanley.

Bankruptcy court emerged as the museum's sole option, Hanley said.

"After a certain length of time (of not paying), the city has the authority to sell the property for the taxes," Hanley told Reuters.

"We started the process of the sale, and now they have filed bankruptcy, and that puts a stay on the sale of the real estate."

The museum's 2007 tax return, the last filed, shows it had raised $577,173 and with other income had a total revenue of $581,740 that year.

Among its $527,050 in expenses were $124,449 worth of "exhibition expenses," $27,700 for advertising and marketing, and a "fundraising event expense" of $34,458.

The museum reported being $54,690 in the black for the year, with net assets valued at $17,581,765.

Four years later, the museum's bankruptcy filing in the Eastern District of Virginia puts estimated liabilities between $1 million and $10 million, with creditors' unsecured claims totaling $3,233,784.


Lexington Design & Fabrication in Los Angeles, which was creating the museum's hi-tech exhibits, is owed the most of any creditors. The bankruptcy filing puts the amount due at about $1.6 million, but the company told Reuters the figure is closer to $200,000.

"It was a project we were really excited about, and we were really sorry when they were unable to raise the necessary money to go forward," CEO Richard Bencivengo said in a phone interview.

"We've already written down the loss. We don't expect there's any opportunity for a nickel-on-the-dollar kind of compensation, and we're all very sad it went south."

Another company, Maryland-based Clark Construction, which provided pre-construction services, said it was not owed any money despite being named as a creditor in court filings.

Cosby declined comment through his agent, and officials listed on the museum's 2007 tax return either would not discuss the bankruptcy or could not be reached.

Mae Tarver's husband Willie, an artist and Korean War veteran, donated a steel sculpture he created of a slave market to the museum before he died last year. Now the 78-year-old Wadley, Georgia widow wants museum directors to authorize payment for the piece or give it back.

"If they're not going to have the museum, they can still have it, but just pay me for it," she said. "If not, I would like for it to be returned."

A Chapter 11 bankruptcy protects applicants from creditors' lawsuits while a court-approved reorganization plan is developed, suggesting museum directors wish to regroup and press ahead with the project.

But city Treasurer Hanley thinks the dream for the Fredericksburg site is dead. He expects the land will be sold and the city will get its tax money, though he said people would "still be delighted" if Wilder could get the project back on its feet.

Joseph Miller, a University of Virginia history professor and slavery expert, said a museum on the history of slavery would offer an important contribution to the national culture.

"I think that it's an important step in moving beyond the divisions that we still inherit from slavery," he said.

"I think that until you put something up front, and people can talk their way through -- however painful that may be -- that it's very hard to move on."

(Editing by Colleen Jenkins and Jerry Norton)